Any currency war could put India in a tough spot

Wed Jan 30, 2013 1:48pm IST

Photos of yuan (top) and U.S. dollar banknotes are displayed at a money exchange in Hong Kong September 13, 2010. REUTERS/Bobby Yip/Files

Photos of yuan (top) and U.S. dollar banknotes are displayed at a money exchange in Hong Kong September 13, 2010.

Credit: Reuters/Bobby Yip/Files

Related Topics

Reuters Market Eye - Finance Minister P. Chidambaram says premature to say Japan's move to weaken yen constitutes a currency war, but urged Asian countries who are looking to stem volatile inflows to avoid depreciations of their currencies.

Chidambaram's comments must be seen in the context that India needs large inflows and a stronger rupee to narrow the current account deficit and to curb inflation.

Despite QE3-led strong inflows into domestic stocks, the rupee actually saw mild depreciation in 2012, with the central bank intervening to prop up the currency.

A currency war could put India in a tough spot, not following other countries in depreciating its currency could make its exports less competitive.

But the country also can't afford a weaker currency at a time when confidence in the rupee is not particularly strong because of the twin deficits.

(Reporting by Subhadip Sircar)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

ICICI Results

ICICI Results

ICICI sets quarterly record profit as Q3 net rises 14 pct  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage